The Fed just gave the signal to short stocks

On Wednesday, the Fed announced that its benchmark interest rate
will remain pegged between 0.25% and 0.50%, where it's been since
December 2015.

In its statement, however, the Fed kept a key piece of language
that, at least in the eyes of one economist, shows that it is too
hawkish relative to economic fundamentals. Said another way:
The Fed still seems to want to raise rates, but market conditions
— and the market's view of the economy — don't really warrant
this action.

Last week, Neil Dutta at Renaissance Macro said in an email that
the Fed needed to remove language that said that "survey-based
measures of longer-term inflation expectations are little
changed, on balance, in recent months."

Well, when markets read the statement on Wednesday, at the end of
the first paragraph, they found this (emphasis added):

In his email, Dutta said — somewhat tongue-in-cheek — that
retaining this language would be a sign to short stocks.

And here we are.

As the chart below shows, inflation expectations as
measured by the Fed's 5-year, 5-year inflation-swap
rate have declined markedly over the last month.
Meanwhile, the
latest inflation expectation reading from the University of
Michigan's consumer-confidence survey showed expectations for
inflation down to 2.4%, a fresh six-year low.

FRED

This again, in Dutta's view, shows a clear disconnect
between markets, which are dragging rates lower in response to
lower expectations about future growth, and the Fed, which seems
to want to raise rates into this action.

Or as Dutta wrote (emphasis his):

We've long believed that the policy statement is the
principal conduit for FOMC communication.If
the statement maintains its existing language, describing survey
measures of long-term inflation expectations as "little changed,"
it would be the rough equivalent of former Senator Phil Gramm
saying the US was in a "mental recession" back in July
2008.Should the FOMC fail to change this
language, they would be sending an unnecessary hawkish signal to
the capital markets.